Is a widow responsible for late husband's debt?
A spouse's liability depends on several factors, including where he or she lives
Dear Credit Score Report,
My husband passed away in 2006. He had no life insurance, and he left me with a mortgage, which I have managed -- with three jobs -- to keep up. The problem is that he had a credit card that I am an authorized user on. Now it's on my record as a charge-off. What can I do? Am I responsible? I have worked hard to manage my credit. I live in Minnesota. -- Deborah
As an authorized user living in a state with no community property laws, you shouldn't suffer either the financial or credit reporting impact of your late husband's unpaid credit card debt.
While you're certainly facing a tough financial challenge, your situation isn't unusual, experts say. That's because banks may decide to target anyone associated with an unpaid account with the hope of recovering their money. In this case, you're in the crosshairs. But unlike some other families dealing with unpaid debt in the wake of a relative's passing, you have two major factors working in your favor:
- Minnesota isn't among the 10 so-called "community property" states that place responsibility on both partners for debt accumulated by either spouse during a marriage. (Those states include: Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In Alaska, you can opt in to community property status, but it's not mandatory like it is in the other nine states.) "Minnesota is not a community property state, so when the sole responsible party dies, usually, the debt is written off in a death claim, especially if there is no estate," says Linda Humburg, a manager with FamilyMeans Consumer Credit Counseling Service in Stillwater, Minn. If there is an estate, however, it may be responsible for repayment.
- Unlike joint account holders or co-signers, authorized credit card users "have charging privileges but no legal obligation to pay the debt," says Gail Cunningham, vice president of public relations with the National Foundation for Credit Counseling (NFCC)." It's now up to you to make sure your credit reports accurately reflect that reality.
How do you do that? To start with, double-check that you are listed as an authorized user, rather than a co-signer, on the account. Humburg recommends asking the bank for a copy of your husband's credit card application or approval notice. Those documents should confirm that you aren't listed as a responsible party or guarantor. If the bank denies your request, that may not be a bad thing. "If she isn't authorized to get information or discuss the account information, and they say something like, 'We can only act on that per the request of your husband,' then she would know that she is not responsible for repayment of the debt," Humburg says. That knowledge will make it easier to get the charge-off notation removed from your credit report.
Once you've confirmed your authorized cardholder status, dispute that charged-off account with the bank and the credit bureaus that list it on your reports. (You can find information about filing disputes at the websites for credit bureaus Experian, Equifax and TransUnion.) Via certified mail, send letters that explain your situation and include supporting documentation. Along with each bureau's specific dispute form and the card agreement -- if it's made available to you -- Humburg recommends sending a copy of the certified death certificate for your late husband. The letter should include a request that the item listed on your credit report "be removed and that the debt be updated as a 'death claim,'" Humburg says. You can also submit a 100-word statement to each bureau explaining your predicament for any potential lenders.
But what if the bank and bureaus don't update that item? Then you'll want to bring out the big guns, starting with a Federal Trade Commission complaint filing. If the FTC can't resolve your problem, the next step up the ladder would be attempting to sue in small claims court, says Sandy Shore, a Freehold, N.J.-based counseling supervisor with nonprofit credit counseling agency Novadebt. After that, "if they are claiming she is still liable, she may need a lawyer," Shore says. Other consumer experts agree. "If these listings would persist or reappear, or the bureaus refuse to remove them and this action causes her harm, I would suggest she discuss the situation with a consumer law attorney in the area," says CCCS's Humburg. "They may be able to break through the 'communication wall' more easily and would know all of the legal points required to get the record corrected," she says.
A lawyer will give more specific advice, but you can be confident in the decision not to repay the bank. Often, there are "situations where the survivors are not well informed and simply capitulate and pay because they don't know their legal rights and make the assumption that they have to do this," says CCCS's Humburg. "You can't blame the collector for trying to recapture the lost funds, but they do eventually have to follow the law and accurately present the situation, whether to the surviving consumers or on the credit report," she says.
See related: Compare states' community property laws, Credit card authorized users, joint account holders differ, How to dispute credit report errors, How to add a written statement to your credit report
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